ILLUSTRATION: GABRIEL PUNSALANG FOR BLOOMBERG BUSINESSWEEK

Over the last couple of years, large companies have been trying out and using blockchain applications in supply chains.  Application Programming Interface economy (API economy) is growing at an exponential rate. They are implementing it in everything from food traceability to clothing even to the marijuana sector in Canada. When using several actors, in supply chains things become less transparent and things can be lost, altered and falsified. Implementing blockchain to verify makes it easier for managing global supply chains. For example, Walmart in 2016 established a five-year plan with IBM’s blockchain solution to track pork in China for a farm-to-table approach. This allowed Walmart to complete end-to-end traceability. For those who are not familiar with blockchain, these solutions seem foolproof and revolutionary. Yet, there are some holes in the process.

For those who want to know, where does Blockchain come from and what is it

Blockchain is a ledger-based technology. Transactions on a blockchain allow digital information to be distributed but not copied. It is a time-stamped series of records that are managed by computers. Each block of data is secured by using cryptic principles. It is not centralized which means that no one owns the information and is open for everyone to see. 

What are the benefits?

With blockchain, vendors, suppliers and store owners get all the access to a product backlog instantly. When Walmart used Hyperledger Fabric to trace their food, it was so that they could trace the outbreak of food-borne disease faster. Rather than spending days or even weeks to find the source they could act faster.  It also creates a time-stamp that is hard to render.

For a company, it adds a competitive advantage. They are able to connect their enterprise with transparent records, but can also keep control over their risk exposure. It creates faster, cheaper transaction settlements, audit transparency, allows tracking social responsibility, better shipping data and reduces counterfeit goods.

So, what’s the issue with enterprise blockchains?

How could there be a problem with blockchain in the supply chain you may ask? There are actually several. for one, a lot of people associate blockchain with Bitcoin. People believe that is it associated but actually are two separate entities, one is a technology, the other a currency. 

It can also create a conflict of interest. What the producer and what the consumer wants creates feature overload. This can make adopting this technology into the supply chain is also a scary process that takes a lot of expertise in order to make sure of its productivity.  It has also been said that blockchain in the supply chain is simply put 75% organization and 25% tech. 

Another issue is that there is not an existing standard for verification. This means that their is no way to verify the standard of how the work is done, if the product is in fact there or that the information that they put on the blockchain is correct. In recent years they have tried to overcome this gap but this is still a major problem. 

Last but not least, immutability will always be an issue with enterprise blockchain. This is because there is only one owner, who can change the rules as you go along. Compare this to for decentralized blockchains, where the rules haven’t been broken or manipulated since inception and will grow stronger as more miners and users join the network. Enterprise blockchain by a big company can be changed, or scrapped, the company wants to (or see fit)

What does the future look like

Blockchain in supply chains has positive and negative impacts. It is a step in the right direction and there is increasing technology being introduced within this field. Wide-spread implementation can help fight Intellectual property theft, counterfeit and promote social responsibility within supply chains. WWF-New Zealand, Australia, and Fiji have teamed up with ConsenSys to strengthen supply chain management in fresh and frozen tuna of the Western and Central Pacific region. This will allow the consumer, with the help of their smartphone app, to find out where the fish was caught, by who and what fishing method. Companies such as Maersk a container logistics company are using Blockchain and British Airways. 

Provenance app for Tuna Blockchain tracking

Remember to follow us on Twitter and Facebook.

Sign up for The Weekly Update by Arcane Research